Recovery Act Initiatives Kept Nearly 7 Million People Out of Poverty in 2010
Posted by: Arloc Sherman
Posted in: Federal Policies, Federal Tax, Food Assistance, Food Stamps, Individuals and Families, Poverty and Income, Recession and Recovery, Taxes and the Economy, Trends, Unemployment, Welfare Reform / TANF
Six temporary stimulus initiatives that Congress enacted in 2009 and 2010 kept 6.9 million Americans out of poverty in 2010, according to a report that we issued today based on newly released Census data.
The six provisions — three new or expanded tax credits, two enhancements of unemployment insurance, and an expansion of SNAP (food stamp) benefits — were originally part of the 2009 Recovery Act, though Congress later extended or expanded some of them.
The official poverty measure counts only cash income, so to see how these measures affected poverty, we used an alternative poverty measure that also takes into account the impact of government benefit programs like SNAP and taxes. Most experts prefer this broader measure, which adopts recommendations of the National Academy of Sciences.
Looking at the six initiatives individually, we found that:
- Expansions in the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) kept 1.6 million people out of poverty.
- The Making Work Pay tax credit, which expired at the end of 2010, kept another 1.5 million people out of poverty.
- Expansions in the duration and level of unemployment insurance benefits kept 3.4 million people out of poverty.
- Expansions in SNAP benefits kept 1.0 million people out of poverty.
(The figures outlined above, and also reflected in the chart below, total more than 6.9 million in part because some people were kept above the poverty line by more than one program, but in the total we counted each person only once.)
As the graph shows, existing policies to promote family income kept millions of additional Americans out of poverty in 2010. For example, the basic SNAP program — not counting the benefit expansions — kept 3.4 million people out of poverty in 2010.
Moreover, these are just the initial effects of government assistance on recipient households. They don’t show the ripple effect across the economy as government assistance allowed struggling consumers to continue to buy goods and services.
These figures don’t mean that government assistance staved off all, or even most, recession-related hardship. Our analysis doesn’t address the families whose incomes fell to only slightly above the poverty line in 2010, for example, or poor families that fell deeper into poverty.
Still, these figures do show that government assistance kept millions of Americans above the poverty line despite the sharpest deterioration in the economy in decades. That is no small accomplishment.
I’ll have more to say about our new report later this week.